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Netherlands to reduce gas production that causes minor earthquakes in country’s north

Jan 17, 2014
Toby Sterling, The Associated Press

AMSTERDAM – The Dutch Cabinet has decided to reduce the amount of gas produced from fields that lie under the country’s northernmost province by 6 per cent, as the mining has caused earthquakes and damaged houses in the region.

Prime Minister Mark Rutte announced the decision Friday. He said that government-commissioned studies have shown beyond a doubt that the gas production did cause the earthquakes — long a topic of debate — which have been going on for years. Although rarely registering more than 3 on the Richter scale, the quakes have led to “material and emotional” damages for some residents in the province of Groningen, Rutte said.

In the small town of Loppersum, where damages have been worst, Economic Affairs Minister Henk Kamp travelled personally to city hall to deliver the news that production there would be cut by 80 per cent.

Tensions were high among protesters before details of the plan were revealed. Two men drove tractors through a set of temporary police gates as Kamp began speaking. That allowed several dozen protesters to approach the building, where they banged on windows, honked air horns and scuffled with police. There were no arrests.

The Cabinet has promised to pay 1.2 billion euros ($1.6 billion) in damages over the coming five years. Additionally, the country will cut annual production in Groningen by about 6 per cent, to 40 billion cubic meters of gas per year. Last year production levels and gas prices were higher than normal, and the government earned more than 12 billion euros from gas exploitation.

The costs and loss of revenue are painful for Rutte’s Cabinet, which has been struggling to bring the government’s budget deficit under 3 per cent. After several rounds of cost-cutting and tax hikes, and several consecutive recessions, there is little enthusiasm among the Dutch for further austerity measures.

However, the costs from the change of policy in Groningen is unlikely to put the government in acute danger: Most economists are forecasting a return to growth this year, and cutting gas production and compensating Groningen for damages should not cost more than 1 per cent of the government’s annual budget.

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